Craftsman Automation shares make weak stock market debut; list with 9% discount over IPO price

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Updated: Mar 25, 2021 10:14 AM

The Rs 824-crore IPO of Craftsman Automation was subscribed nearly 4 times by investors. Upon listing Craftsman Automation became the twelfth stock to debut on the bourses, along with Laxmi Organic Industries in 2021.

craftsman automation IPO, craftsman automation shares listingAnalysts believe that transformation from BS-IV to BS-VI, vehicle scrappage policy and electric vehicles introduction, are likely to benefit this auto component maker in the long-term

Craftsman Automation shares made a weak listing on the stock exchanges today. Craftsman Automation stocks opened at Rs 1,350 per share, down Rs 140 apiece from the IPO price of Rs 1,490 per share. On listing, Craftsman Automation had a market capitalization of Rs 2,927 crore. The Rs 824-crore IPO of Craftsman Automation was subscribed nearly 4 times by investors. Upon listing Craftsman Automation became the twelfth stock to debut on the bourses, along with Laxmi Organic Industries in 2021.

Check prices: Craftsman Automation

Craftsman Automation Limited is a diversified engineering company with vertically integrated manufacturing capabilities, engaged in three business segments, namely powertrain and other products for the automotive segment, aluminium products for the automotive segment and industrial and engineering products segment. It’s top clients include Daimler India, Tata Motors, Mahindra & Mahindra, Escorts, Ashok Leyland, Mitsubishi Heavy Industries, JCB India and Royal Enfield, among others.

At least nine research and brokerage houses had given ‘subscribe’ rating to the Craftsman Automation issue for the long-term. Analysts believe that transformation from BS-IV to BS-VI, vehicle scrappage policy and electric vehicles introduction, are likely to benefit this auto component maker in the long-term. In the tractor industry, Craftsman Automation is among the top 3-4 component manufacturers with respect to cylinder block machining. Analysts at ICICI direct Research in its IPO note said that Craftsman Automation is a play on revival in automotive industry, especially M&HCV space. But the key risk and concerns include powertrain and allied component business prone to EV risk, limited long term RM supply contracts, prone to supply chain risk, and low aftermarket presence ties fortunes to OEM cyclicality.

Those at Nirmal Bang said that CAL’s margins are well above peers on the back of its leadership position in the highest value segment amongst all engine parts of – cylinder heads and cylinder blocks. ROCE is in-line with industry peers and accordingly the P/E multiples are also broadly in line with peers. “With the auto upcycle having commenced and aggressive repayment of debt, return ratios are likely to witness a strong uptick,” they added

(The recommendations in this story are by the respective research and brokerage firm. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)

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